Press Story

The Bank of England has raised interest rates to 4 per cent today, its first rise since 2023. Inflation reached 3.5 per cent in September, and the Bank expects it to pass 4 per cent early next year. Markets expect more rises to follow next year.

Responding to the latest MPC decision, William Ellis, senior economist at IPPR, said:

“Raising interest rates today does nothing to address the current pressure on prices – driven by the conflict in Iran - and risks further costs for households.

“Higher rates won’t reopen the Strait of Hormuz or bring down energy prices. Instead, they will add to mortgage bills for households already paying more for heating and fuel. With the energy price cap for a typical household still forecast to rise by at least £400 a year in January, families face being squeezed from both sides.

“The government was right to act on prices at the Budget. IPPR estimates the governments cost of living measures will lower inflation by at least 0.2 percentage points. But that was not enough to stop the Bank raising rates today. Ministers should go further and introduce a temporary ceiling of £2,000 a year on a typical household’s energy bill. That would cut inflation at source and reduce the need for further rate rises”

ENDS

William Ellis is available for interview

CONTACT

Rosie Okumbe, senior digital and media officer, 07825 185421 [email protected]

David Wastell, director of news and communication, 07921 403651 [email protected]

NOTES TO EDITORS

IPPR is the UK’s most influential think tank, with alumni in Downing Street, the cabinet and parliament. We are the ideas factory behind many of the current government’s flagship policies, including changes to fiscal rules, the creation of a National Wealth Fund, GB Energy, devolution, and reforms to the NHS. IPPR is an independent charity which has seconded staff to government departments including DHSC and DESNZ to support ministers on crucial policies such as the 10-year health plan and the industrial strategy: www.ippr.org